Govt plans to recover all GIDC arrears with interest3 min read

ISLAMABAD: The government has planned to recover all outstanding GIDC (Gas Infrastructure Development Cess) along with interest from all consumers except for compressed natural gas (CNG) stations that will get a 50% relief in cess payment, says an official.In a bid to pave the way for this, the Senate Standing Committee on Petroleum and Natural Resources has recently approved the Gas Infrastructure Development Cess (Amendment) Bill 2018.

Rules are being amended in accordance with observations of courts and auditors who are of the view that the rules do not allow the government to recover GIDC arrears from the gas consumers.

According to the official, amendments to the law will allow CNG stations to pay half – Rs12 billion – of the outstanding GIDC to the government.

However, from other gas consumers, the government is planning to recover the entire outstanding cess along with mark-up at 4% above three-month Karachi Inter-bank Offered Rate (Kibor). The mark-up will continue to build until all the arrears are cleared.

For the GIDC collection, the government will apply old cess rates which include Rs300 per million British thermal units (mmbtu) on fertiliser feedstock, Rs150 per mmbtu on fertiliser fuel, Rs200 per unit on captive power plants, Rs100 per unit on the industry, K-Electric, state power generation companies and independent power plants, Rs263.56 per unit on CNG stations in region-I and Rs200 per unit on CNG stations in region-II.

Officials caution if the government pushes ahead with the proposed plan of recovering all arrears with interest from the consumers except for CNG stations, it may spark a controversy and stakeholders will go to courts to fight the levy.

The government had faced a shortfall of Rs95 billion as it could not collect most of the GIDC due to cases filed by the consumers in courts, which had given stay orders. As a result, it may be able to collect a meagre GIDC during the ongoing fiscal year 2017-18, which will end on June 30.

The previous Pakistan Peoples Party (PPP) government had imposed the cess in an effort to finance the building of pipelines for gas import from Iran and Turkmenistan, but the current Pakistan Muslim League-Nawaz (PML-N) administration spent all the collection amounting to more than Rs300 billion on projects like Metro bus and on bridging the budget deficit.

So far, not a single pipeline has been laid with the help of GIDC. Rather, public gas utilities have been forced to borrow loans of over Rs100 billion from commercial banks to fund their network expansion.

Keeping in view the constraints, the government has set the GIDC collection target for upcoming fiscal year 2018-19 at a lower level at Rs100 billion. For the outgoing year, the GIDC receipt target was set at Rs110 billion, which was later revised to just Rs15 billion.